LONDON (Reuters) - Legal & General expects the market for transferring the pension liabilities of British firms to insurers to more than double in 2008 from last year, as momentum builds in the trillion-pound sector.

The buyout market has expanded in the past two years from a handful of players, led by L&G and rival Prudential (PRU.L: Quote, Profile, Research), to include specialist start-ups like Paternoster, with demand led not by insolvent employers but increasingly by solvent companies hoping to cut their exposure to risks they cannot mitigate.

In 2007, a bumper year for the market, the buyout market totalled 2.7 billion pounds, up from 1.7 billion a year earlier, but Simon Gadd, managing director of L&G's (LGEN.L: Quote, Profile, Research) annuities business, said it will continue to rise despite broader financial market turbulence.

"2008 will easily see a doubling again of the market," Gadd told Reuters on Monday. Deals signed by L&G and rivals including Paternoster, Goldman Sachs' (GS.N: Quote, Profile, Research) Rothesay Life and others so far this year already add up to close to 2007 levels, he said.

"We've never been so busy, in terms of the volumes of quotes, as we have been in the last six months or so. These are also bigger schemes," Gadd said. "I can't see anything that is going to stop the momentum we have at the moment, given the costs and constraints of running a defined benefit scheme."

L&G, the most domestic-focused of the UK insurers, has said it expects bulk annuity volumes in the first half to remain in line with a strong fourth quarter, but has said there is little visibility beyond that.

Gadd declined to give further forecasts but said margins, which have eased due to a different mix of business being taken on by the insurer, would remain at current levels.

In the first quarter, bulk annuities helped L&G offset a weak market for other products including protection, hit by the downturn in UK property, and individual annuities, where investors have been deferring investment decisions.

Analysts have expressed concerns over the insurer's growing dependence on a business that remains bulky and unpredictable, but Gadd said developments in the business, including the move to tailored deals -- as companies reduce the risk on their balance sheets in several tranches -- would help smooth out revenue.